Investing.com-- Elon Musk had pushed for a 20% headcount reduction in Tesla Inc (NASDAQ:TSLA), Bloomberg reported on Sunday, citing a source close to the EV maker’s CEO as it undertakes a pivot into autonomous vehicles following a drop in deliveries.
Tesla had last week trimmed its workforce by over 10%, eliminating at least 14,000 jobs. But Bloomberg’s report said that the actual number of reductions could be more than 20,000 roles.
The sharp reduction in headcount comes at the heels of what analysts described as a “nightmare” quarter for Tesla. The world’s most valuable electric vehicle maker clocked its first decline in quarterly deliveries in nearly four years.
Deliveries fell about 20% in the first quarter of 2024 from the prior quarter- a figure which had also factored into Musk’s call for a 20% headcount reduction, the Bloomberg report said.
The drop was driven by increased competition from Chinese EV makers, as well as softening EV demand in U.S. and European markets.
The EV maker is now looking to pivot heavily into robotaxis and full self-driving software. Musk claimed on social media that Tesla’s first robotaxi will be revealed in August this year.
Development of a robotaxi is also reportedly taking precedence over plans for a cheaper EV model, which analysts and investors had hoped would help revive sluggish sales for the company.
But Musk has been touting the idea of a robotaxi for nearly eight years now, while Tesla’s FSD software- the name of which is regarded as a misnomer- has landed the EV maker a myriad of lawsuits over safety concerns.
Production issues with the recently-launched Cybertruck also battered sentiment towards Tesla. The company had last week recalled the nearly 4,000 Cybertrucks it had sold so far to fix a faulty accelerator pad- which locked the vehicle into 100% acceleration and presented a major safety risk.
Dropping sales, doubts over its FSD pivot and uncertainty over Musk’s priorities saw Tesla lose 39% in market capital so far in 2024- nearly half a trillion dollars.
The stock took little support from its headcount reduction, while price cuts in its EV models and FSD software over the weekend only presented more margin pressure on the company.
Tesla is set to report its first quarter earnings on Tuesday, and is expected to log a sharp decline in its operating profit. Tesla is also expected to clock its first revenue drop in four years.